-
8/12/2019 (eBook) How to Retire Rich - Creating Your Own Personal Fortune Formula Workbook, Vol. 2 by Jordan Goodman (2003)
1/33
Jordan E. Goodmans
HOW TO RETIRE RICH:
Creating Your OwnPersonal Fortune Formula
Workbook
Volume Two
2003 Jordan E. Goodman
-
8/12/2019 (eBook) How to Retire Rich - Creating Your Own Personal Fortune Formula Workbook, Vol. 2 by Jordan Goodman (2003)
2/33
Jordan E. GoodmansHOW TO RETIRE RICH Volume Tw o 2
Table of Contents Volume Two
IMPLEMENTING YOUR PERSONAL PLAN (contd)
Session 9: Investing Beyond Tax-Sheltered Accounts Stocks & Bonds 3
Session 10: Investing Beyond Tax-Sheltered Accounts Mutual Funds, CDs, Annuities, and the Risks 5
Session 11: How to Evaluate an Early Retirement Offer 10
Sessions 12-13 Getting the Best Deals on Different Types of Insurance 11
CREATING RETIREMENT SECURITY
Session 14: Maintaining a Fail-Safe Retirement 19
Session 15: Estate Planning that Avoids Additional Costs 22
Session 16: How to Age with Grace and Ease Enjoying Your Retirement 26
Many of th e tables and fi nan cial fi gu res listed in th is gu idebook are based on cu rrent government
statisti cs. Often, they change on an annu al basis; thu s, to obtai n th e most recent i nform ati on, you
shoul d check th em w it h th e appropri ate government agency.
-
8/12/2019 (eBook) How to Retire Rich - Creating Your Own Personal Fortune Formula Workbook, Vol. 2 by Jordan Goodman (2003)
3/33
IMPLEMENTING YOUR PERSONAL PLAN (contd)
Session 9: Investing Beyond Tax-Sheltered Accounts Stocks & Bonds
I n th is sessi on Jordan t akes you t hr ou gh stocks, bonds, and other in vestm ent su ggestion s beyond
your tax-sheltered accoun ts. He explai ns tha t tho se account s, in and of t hem selves, are not lu cra-ti ve enou gh to see you thr ough you r r e ti rem ent, and he provides you w it h concrete gu idelin es on
how to in vest your m oney in them for maxim um gain and mi ni mal risk.
The Nine Keys to Intelligent Stock Investing:
- Plan to invest for the long term.
- Buy stocks systematically.
- Invest in stocks that you know well.
- Research your choices carefully.
- Monitor the company after youve bought shares.
- Dont be pressured to buy or sell just because everyone else is doing so.
- Dont worry about missing out on a good stock.
- Have a selling target price in mind when you buy a stock.
- Consider transaction costs before you buy.
The Five Categories of Stocks:
- Cyclical stocks ride the economic cycle. (auto, paper, chemical, steel, and aluminum
manufacturing).
- Growth stock earnings should compound at 15% or more no matter what the overall
economy. You should look at the earnings growth rate when purchasing them.
- Income stocks (banks, real estate investment trust, electric, gas, water, utilities) are
greatly influenced by the direction of interest rates.
- Out-of-favor stocks should be bought when they are unpopular and sold when they
become popular again.
- Value stocks are bought at less than the shares are actually worth. The key is to know
when the companys asserts are worth more than the stock price is.
Jordan E. GoodmansHOW TO RETIRE RICH Volum e Tw o 3
-
8/12/2019 (eBook) How to Retire Rich - Creating Your Own Personal Fortune Formula Workbook, Vol. 2 by Jordan Goodman (2003)
4/33
Types of Bonds:
Treasury and U.S. savings bonds (Series EE and Series I bonds)
Government agency securities Mortgage-backed securities
Municipal bonds
Corporate bonds
Zero-Coupon bonds
Convertible bonds
Junk bonds
Jordan E. GoodmansHOW TO RETIRE RICH Volume Tw o 4
Percentage Points Rate Increase in a Year
How Bond Prices of Different Maturity Bonds React to Changes in Interest Rates
Percentage Points Rate Decrease in a Year
-
8/12/2019 (eBook) How to Retire Rich - Creating Your Own Personal Fortune Formula Workbook, Vol. 2 by Jordan Goodman (2003)
5/33
Jordan E. GoodmansHOW TO RETIRE RICH Volume Tw o 5
Session 10: Investing Beyond Tax-Sheltered Accounts Mutual Funds, CDs, Annuities, and the Risks
Jordan cont in ues his discussion on in vestin g beyond tax-sheltered accoun ts in thi s session , focus-
in g on m ut ual fu nds, CDs, and ann ui ti es. H e then details the risks that are involved in doi ng so.
MUTUAL FUNDS (load vs. no-load funds):
There are two different kinds of mutual funds, those based on load or on no load.
Load is a fund that you buy through a commissioned salesperson or financial planner or
broker. You are paying him or her this commission for the advice they are giving you on
which of the thousands of mutual funds in the market is right for you. There are different
ways of paying that commission. It can be up-front, typically 41/2% to 5%, which are called
A shares. Or it can be a B share, which means you dont pay anything up-front, but if you
get out of the fund within the first 5 or 6 years, then youll pay a commission as you sell.
Or it can be a C share, for which you pay a low level of commission every year as long as
you hold the fund.
The other kind are no-load funds, which are those you buy directly from the fund compa-ny with no commissions whatsoever. Now the advantage clearly is you do not have any
kind of sales commission, but this advantage is you have to make the decision yourself to
pick a fund and go for whats best for you. The fund company will generally describe how
these funds work, but they will not, in fact, advise you on which fund to invest in.
In buying a mutual fund look for:
What the management fees are. The lowest would be about .2% of your assets, and they
can be as high as 2%. These fees are deducted automatically from the value of your funds,
so if the fund charges a high management fee like 2%, that can really lower your return.
So if you earned 11% last year, you actually are going to take home 9% because that 2% of
management fees is going to be deducted automatically.
Take a look at the track record of the fund manager and see if he or she has actually been
producing the kind of results youre looking for over a longer period of time.
Look at the funds style. Find out exactly what their style is.
Look for convenience in picking a funds. In addition to getting a high return, you want to
have all the record keeping held in one place if possible.
Look for the quality of service. You want an automated phone-answering system so you
can get the prices and yields and how youre doing at any time, 24 hours a day. You also
want knowledgeable and helpful phone representatives.
You want easy-to-read statements. You dont want to have to be a lawyer or mutual fund
expert to be able to make sense of your statement.
-
8/12/2019 (eBook) How to Retire Rich - Creating Your Own Personal Fortune Formula Workbook, Vol. 2 by Jordan Goodman (2003)
6/33
Jordan E. GoodmansHOW TO RETIRE RICH Volume Tw o 6
The types of bond funds:
Government
Municipal
Short-term and intermediate-term
Convertible
High-grade corporate
Mortgage-backed security
Global bond
High-yield junk
Zero-coupon
How closed-end mutual funds differ from open-end funds:
Open-end mutual funds continue to create new shares as new money comes in. Closed end
funds do not create new shares all the time. They offer a specific number of shares, then
trade on the New York Stock Exchange (unlike open-end funds, which are always trading at
the net asset value of the fund, a closed-end fund can actually be trading for a price higher
than its portfolio is worth, at a so-called premium, or be trading at lower than its portfolio
worth, being at a discount).
CERTIFICATES OF DEPOSITS (CDs):
Issued by banks, savings and loans, and credit unions,CDs allow you to lock in a particu-
lar interest rate for a specific period (for as short as three months, six months, one year, or
usually as long as five years).
In general, the longer you commit your money to a CD, the higher your yield is going to
be. Banks usually set a minimum amount for CDs (usually this can be as low as $100, orsometimes as much as $1,000).
You do not get charged a fee to buy a certificate.
Banks pay interest on CDs in several ways.
In many cases the interest is not paid until the CD matures.
For longer-term CDs, say 3 to 5 years, the banks will typically mail you a check every 3
or 6 months.
Interest from CDs is taxable at all government levels after its received, even if its reinvest-
ed. So youre going to be taxed at the federal, state, and local levels.
The attractive feature of CDs is their safety. As long as you have up to $100,000 in a FDIC
insured bank, you are guaranteed to get back your principal and all interest due.
-
8/12/2019 (eBook) How to Retire Rich - Creating Your Own Personal Fortune Formula Workbook, Vol. 2 by Jordan Goodman (2003)
7/33
Jordan E. GoodmansHOW TO RETIRE RICH Volum e Tw o 7
ANNUITIES:
They provide a regular stream of income as long as you live, usually in retirement, in contrast
with life insurance, which pays your beneficiaries a lump sum when you die. Annuities also pro-
vide the advantage of tax-deferred compounding on the investment portion of the account.
Two kinds of annuities:
Immediate annuities:These are purchased with a lump sum. Typically, youll invest a large amount of money
from a 401(k) or IRA rollover, and theyre purchased if youre in retirement to provide
a steady stream of income. You invest $50,000 or $100,000, and they will pay you a
particular level of monthly income no matter how long you live.
Deferred annuities:
These are typically bought by younger people who want to save on a tax-deferred basis
for many years and then eventually annuitize it or convert it into a payout once theyve
retired. You can buy deferred annuities for as little as $25. If you have a large amount
of money, you can also buy whats called a single premium deferred annuity, or SPDA,
which typically requires at least $2,500. If you put in a large amount of money, you
dont have to put in anything beyond that, and then the money will grow tax-deferredover many years until you start collecting it in retirement.
You have a choice of how your money is invested inside the annuity, either a fixed annuity
or a variable annuity:
A fixed annuity is going to give you a fixed level of return for a particular period of
time, maybe 5 years or so. Make sure your policy offers a bailout provision, which
gives you the right to liquidate all or part of your annuity without cost if your renewal
rate is less than 1% of the previously offered rate. So, for example, if they started you
off at 5% and they go down to 2%, you should have a bailout provision that allows you
to get out without penalty.
A variable annuity has potential for higher returns, though youre taking much morerisk. The variable annuity contract gives you a choice among several stock, bond, and
money market portfolios. Within the stock category, you can choose from aggressive
growth and income, international, balanced, value, all kinds of different choices. And
within the bond portfolio, you can choose from corporate, government, high yield,
international and fixed-income portfolios. You choose how youre going to be allocat-
ing your money among these different stock and bond options.
How to research and track the best possible annuity:
The Vari able Annu it y Research and Data Servi ce Lar ge Report
4343 Shallowford Dr., Marietta, GA 30062; 770-998-5186
Comparative Annui ty Reports
P.O. Box 1268, Fair Oaks, CA 95628; 916-487-7863
Annui ty Shopper
8 Talmadge Dr., Monroe TWP, NJ 08831; 800-872-6684; 732-521-5110;
www.annuityshopper.com
-
8/12/2019 (eBook) How to Retire Rich - Creating Your Own Personal Fortune Formula Workbook, Vol. 2 by Jordan Goodman (2003)
8/33
Payout options:
10-year certain annuity. If you think youre going to be living 10 years or less, this will pay
you out the highest amount. It will make a certain payment based on the amount youve
accumulated in that annuity for 10 years and then will stop paying altogether.
A life annuity with 10-year term certain. In this case the annuity will pay the fixed month-
ly amount for the rest of your life. However, if you die before the annuity has paid youbenefits for 10 years, your beneficiary, normally your spouse, is going to receive your pay-
ments for the remainder of the original 10 years.
A life annuity. This is where youre going to be paid a certain amount for the rest of your
life no matter how long that may be, and its going to be a lower payment than if you took
10-year certain. But your beneficiary receives no direct payments. Once you die, annuity
payments stop.
A joint and survivor annuity. If youre married or somebodys depending on your income,
you want to select this option because it pays a fixed amount until both you and your
spouse or dependent die. When you die, your spouse or dependent is going to receive
whats called a qualified joint and survivor annuity (QJSA) until he or she dies.
When picking an annuity:
Its very important to take a look at fees and expenses.
Many times there are large commissions involved in these annuities, and that can hurt the
returns you earn longer term.
The other fees to watch out for with annuities are so-called surrender charges. These can
be as much as 10% of your principal if you want to take your annuity out and transfer it
to another company within the first 5 to 7 years of the contract.
In addition to commissions and surrender charges, annuities have annual maintenance
fees of maybe $25 to $50 to cover administrative costs in maintaining the account.
Look at the asset management fees in the underlying funds inside a variable account. They
can be as low as .2% or as much as 2%. In general, the lower the fees, the more you get to
keep for yourself.
The 10 Investment risks:
Currency risk
Deflation risk
Lack-of-diversification risk
Inflation risk
Interest rate risk
Lack-of-liquidity risk
Playing-it-too-safe risk
Political risk
Repayment risk
Volatility risk
Jordan E. GoodmansHOW TO RETIRE RICH Volume Tw o 8
-
8/12/2019 (eBook) How to Retire Rich - Creating Your Own Personal Fortune Formula Workbook, Vol. 2 by Jordan Goodman (2003)
9/33
Jordan E. GoodmansHOW TO RETIRE RICH Volum e Tw o 9
The Investment Risk Pyramid
-
8/12/2019 (eBook) How to Retire Rich - Creating Your Own Personal Fortune Formula Workbook, Vol. 2 by Jordan Goodman (2003)
10/33
Session 11: How to Evaluate an Early Retirement Offer
I n th is day amd age, many are offered ear ly re ti remen t packages. In thi s session Jordan w i ll dis-
cuss how you can best evaluate if an d when you would benefit f rom such a package.
The six tough questions you should ask yourself if youre getting and early retirement offer:
1. How much is on the table?
2. Do I have a choice of how much is paid in my severance package?
3. What are the components of my package?
4. What benefits can I keep?
5. What happens if I dont take the offer?
6. Can I work out some kind of continuing relationship with the company if I take the pack-
age?
The three methods for early withdrawals of retirement funds prior to age 591/2 without being
penalized the 10% withdrawal fee.
The Retire Early website, www.RetireEarlyHomePage.com, offers loads of information and
advice to assist you in making your early retirement decision.
The other factors that you should make note of when considering an early retirement offer:
Health insurance
Reassessing your home situation (sell and move into smaller home, move into cheaper
areas, house-sitting)
Jordan E. GoodmansHOW TO RETIRE RICH Volume Tw o 10
Three Methods for IRA Early Withdrawals
-
8/12/2019 (eBook) How to Retire Rich - Creating Your Own Personal Fortune Formula Workbook, Vol. 2 by Jordan Goodman (2003)
11/33
Jordan E. GoodmansHOW TO RETIRE RICH Volume Tw o 11
Sessions 12 & 13: Getting the Best Deals on Different Types of Insurances
Gett in g a good deal on in sur ance coverage is i mperat iv e in keepin g your costs low du ri ng re t i re-
m ent . I n thi s session Jordan w il l di scuss how in suran ce changes upon re ti rement and h ow you
can get t he best deals on i nsu ran ce.
Insurance Rating Systems
-
8/12/2019 (eBook) How to Retire Rich - Creating Your Own Personal Fortune Formula Workbook, Vol. 2 by Jordan Goodman (2003)
12/33
The four different ways that insurance is offered:
Agents
Brokers
Advisors
Direct marketing
Jordan E. GoodmansHOW TO RETIRE RICH Volume Tw o 12
Death Expense Worksheet
-
8/12/2019 (eBook) How to Retire Rich - Creating Your Own Personal Fortune Formula Workbook, Vol. 2 by Jordan Goodman (2003)
13/33
Jordan E. GoodmansHOW TO RETIRE RICH Volum e Tw o 13
Survivors Worksheet Part 1
-
8/12/2019 (eBook) How to Retire Rich - Creating Your Own Personal Fortune Formula Workbook, Vol. 2 by Jordan Goodman (2003)
14/33
Jordan E. GoodmansHOW TO RETIRE RICH Volum e Tw o 14
Survivors Worksheet Part 2
-
8/12/2019 (eBook) How to Retire Rich - Creating Your Own Personal Fortune Formula Workbook, Vol. 2 by Jordan Goodman (2003)
15/33
Jordan E. GoodmansHOW TO RETIRE RICH Volume Tw o 15
The different types of life insurance:
Term insurance
Cash-value insurance:
Whole life insurance
Universal life insurance
Variable life insurance
Second-to-die insurance
Accelerated death benefit insurance
Types of health insurance:
Traditional fee-for-service indemnity plans
Health maintenance organizations (HMOs)
For an unbiased evaluation of a managed care plan you are thinking of using, contact the
(not-for-profit) National Committee for Quality Assurance (NCQA), at www.ncqa.org
Preferred provider organizations (PPOs)
Medicare: (www.medicare.gov)
Part A covers:
Hospitalization
Skilled-nursing facility care
Home health care
Hospice care
Blood
Part B covers:
Medicare services
Clinical laboratory service
Home health care
Outpatient hospital care
Blood
-
8/12/2019 (eBook) How to Retire Rich - Creating Your Own Personal Fortune Formula Workbook, Vol. 2 by Jordan Goodman (2003)
16/33
For information on Medicaid, you can contact your local department of social services or
www.cms.hhs.gov, and links at www.hcfc.gov/medical/mcaicnsm.htm.
Health insurance for low-income families and individuals. To qualify you must be: On public assistance
An American citizen
A parent with children, elderly or disabled
Jordan E. GoodmansHOW TO RETIRE RICH Volume Tw o 16
Benefits Offered by Medicare Supplemental Policies
-
8/12/2019 (eBook) How to Retire Rich - Creating Your Own Personal Fortune Formula Workbook, Vol. 2 by Jordan Goodman (2003)
17/33
Jordan E. GoodmansHOW TO RETIRE RICH Volum e Tw o 17
Types of Disability Insurance:
Social Security Benefits: The ground rules for receiving these payments are:
You must be disabled for at least five months and expect to be out of commission for a
total of at least a year.
The amount you receive from Social Security is reduced by other payments you get
from other government disability programs.
You must not be able to perform any job whatsoever, not just the work you did before
you were injured.
You qualify for Medicare after receiving Social Security payments for two years.
You must pay federal income tax on your disability benefits if your income exceeds a
certain limit.
Researching the clauses in a disability contract can be crucial in determining the benefits you
would receive if you were injured. Take note of:
Definition of disability
Cause of disability
Exclusions
Residual benefits
Payment amount
Benefit payment method
Beginning payment date
Payment caps
Ending payment date
Renewability
The different types of services that long-term care insurance covers are: Nursing
Social
Rehabilitation
For prolonged illness: bathing, dressing, eating, taking medicine
-
8/12/2019 (eBook) How to Retire Rich - Creating Your Own Personal Fortune Formula Workbook, Vol. 2 by Jordan Goodman (2003)
18/33
Jordan E. GoodmansHOW TO RETIRE RICH Volume Tw o 18
Disability Income Worksheet
-
8/12/2019 (eBook) How to Retire Rich - Creating Your Own Personal Fortune Formula Workbook, Vol. 2 by Jordan Goodman (2003)
19/33
Jordan E. GoodmansHOW TO RETIRE RICH Volume Tw o 19
CREATING RETIREMENT SECURITY
Session 14: Maintaining a Fail-Safe Retirement
I n thi s sessi on Jordan di scusses the vari ous action steps that you can take now to foolproof your
ret i rement plans.
1. Your Fail-safe Retirement Checklist:
I have set aside a specified amount from my paycheck every week that is placed into a
tax-deferred retirement plan.
I have created and implemented a systematic savings plan whenever possible.
I have finished my financial retirement plan in this program, and will continue to visit
it, and if necessary update it regularly.
I have diversified my retirement investment portfolio so that I can achieve security
whatever the economic climate.
I am living a comfortable lifestyle now and am not spending beyond my means.
I have written both a will and living will, and made my personal wishes known.
I have organized my retirement investment portfolio and have it kept in a safe place.
I am paying off any current debts that I have so that I am not encumbered by large
interest payments that would take funding away from my retirement investments.
I am extending my life experiences beyond my job, into other hobbies and social
a c t i v i t i e s .
I have a clear vision of my retirement goals and am actively pursuing them.
-
8/12/2019 (eBook) How to Retire Rich - Creating Your Own Personal Fortune Formula Workbook, Vol. 2 by Jordan Goodman (2003)
20/33
2. Your To-Do List:
Simplify your life (start to go through cupboards and crawlspaces and get rid of stuff
that is causing disorganization and chaos in your life.)
Clean up. Do a physical cleanup. Make a list of the burdens that are stressing you, or
that always remain as a note in the back of your minds. Is the garage encumbered with
junk that needs to be thrown away? Do you have clothing that no longer fits and hasbeen sitting in the closet for years?
Do an emotional cleanup. Make a list of anyone that you feel you need to make amends
with. Also make a list of the individuals in your life that take too much energy from you.
Make the choice to end unhealthy relationships and nurture beneficial ones.
Do a spiritual cleanup. Are you where you want to be spiritually in your life? If not,
what action steps do you need to take to nourish your spiritual journey?
Finances. Sit down and do a step-by-step action plan, committing to particular dates
and taking action on the items that you have been procrastinating on.
Prepare both a living will and a regular will.
If necessary, meet with an investment advisor to discuss retirement investment options.When possible, start planning now.
Take care of insurance, funeral arrangements, and healthcare plans. This may be diffi-
cult but will make your life and the life of your loved ones much simpler and stress-free.
Create a monthly nest egg savings plan and commit to it. The more you save now, the
easier the transition into retirement will become.
Jordan E. GoodmansHOW TO RETIRE RICH Volum e Tw o 20
-
8/12/2019 (eBook) How to Retire Rich - Creating Your Own Personal Fortune Formula Workbook, Vol. 2 by Jordan Goodman (2003)
21/33
Jordan E. GoodmansHOW TO RETIRE RICH Volum e Tw o 21
Some of the loss-preventive measures you can now take to save you from future financial
distress:
Reduce investment management fees.
Reduce commission payouts.
Pay off the mortgage of your home.
Pay off any debts.
3. The checklist of 10 action steps that you can take when losses do occur:
Gain a broader perspective of the history of the market, realizing that it rises and falls (and
that what goes down, eventually must go up!).
Write out a list of the assets that you have that are most important to you.
Make a list of your greatest fears, imagining the worst-case scenario. Then step back and
ask yourself if you could survive such a challenge.
Make a list of individuals who you feel can support you emotionally, financially, and spiritu-
ally. If you dont already have one, find a support group to assist you through this transition.
Make a list of commitments you are going to discipline yourself to do no matter what (vol-
unteer, exercise, eat right, get out and connect with good friends, walk in nature each day,
etc.)
Take some time to express how you feel about your predicament write it out or share it
with a supportive and trusted friend or support group.
Write a list of the wonderful accomplishments that you have made in your life.
Re-assess and re-allocate funds if necessary. Seek the advice of a sound investment strategist
to do so.
Write a list of all of the blessings that you have received in your life. Remind yourself of thegifts that you have received and what you are grateful for, and keep the list posted in a visi-
ble area of your home as a reminder.
-
8/12/2019 (eBook) How to Retire Rich - Creating Your Own Personal Fortune Formula Workbook, Vol. 2 by Jordan Goodman (2003)
22/33
Session 15: Estate Planning that Avoids Additional Costs
In this session Jordan will guide you through the necessary steps that you need to take to carry
out successful estate planning that is cost-effective. The more these items are taken care of early
on, the richer and more stress-free your retirement life will become.
The logistics of funeral arrangements:
Decide what kind of final disposition you want (burial, cremation, etc.).
Choose a plot (if burial).
Choose a funeral home.
Make funeral arrangements, locking in the price.
Funeral director:
Get multiple copies of death certificates
Choose caskets.
Research pre-arranged funeral packages.
Join a memorial society. Funeral Consumers Alliance, 800-765-0107, or www.funerals.org.
4. Prepare a living will and an advanced medical directive (health care power of attorney) so
that your relatives or the people you depend on have the legal power to make medical deci-
sions on your behalf, and not keep you alive when you really dont want to be alive at the very
end of your life.
The probate process: (A court decides where your money goes and executes your will)
Establish whether or not the will is valid.
Appoint an executor to administer the estate (usually named in the will).
File a federal and state tax return within 9 months of death if the estates value exceeds the
lifetime estate tax exemptions, which start at $1 million and will gradually go up to $3.5
million by the year 2006.
The executor distributes the assets (receives a commission fee, typically 3% of all amounts
paid).
All proceedings are public knowledge.
To minimize the amount of probate you have to go through:
- Give assets away as gifts during your life.
- Hold assets in joint tenancy so they automatically revert to the other person who is
on the assets.
- Enter contractual agreements life insurance, pensions, etc.
- Set up trusts.
Jordan E. GoodmansHOW TO RETIRE RICH Volume Tw o 22
-
8/12/2019 (eBook) How to Retire Rich - Creating Your Own Personal Fortune Formula Workbook, Vol. 2 by Jordan Goodman (2003)
23/33
Jordan E. GoodmansHOW TO RETIRE RICH Volum e Tw o 23
TRUSTS:
A lifetime, or whats known as an intervivos trust, is the most common technique used to avoid
probate. Trusts hold assets that when you die will not be considered part of your estate for pro-
bate or estate tax purposes. A trust agreement permits you to set aside assets for the ultimate
benefit of another person, called the beneficiary. In some cases the beneficiary will receive
income from the trust assets for life, while in other cases they will receive principal from thetrusts.
Three parties:
1. The grantor or donor is the person whose assets are placed in the trust.
2. The beneficiary is the person who receives the benefits - income or principal from the
trust.
3. The trustee is the independent manager who administers the trust to make sure that your
wishes are fulfilled. You may name as trustee yourself, a relative, a trusted friend or busi-
ness associate, or a financial professional like a lawyer or accountant, or an institution
like a bank or a brokerage firm.
The trust:
Must be established by a formal written legal document
If you establish a more complicated trust, you should use an attorney who specializes in
estate planning.
There are basically two kinds of trusts: revocable and irrevocable:
- Revocable trusts can be changed or even canceled at any time after theyre established.
For this reason they do not remove assets from a grantors taxable estate. The govern-
ment considers those assets as being still under the grantors control. You must pay
income taxes on revenue generated by the trust, and possibly estate taxes on those
assets remaining at your death.- Irrevocable trusts cannot be altered or canceled once theyre established. The assets
placed into them are permanently removed from your estate and transferred to the
trust. The trust becomes a separate taxable entity that pays taxes on the income and
capital gains generated. Therefore, when you die, the appreciation of those assets is
not considered part of your estate and therefore avoids estate taxes.
- Both revocable and irrevocable trusts can help you transfer assets to beneficiaries after
your death, and they can be used to hold the assets of someone whos mentally or
physically incapacitated. Upon your death the trustee must report expenditures annu-
ally to a judge. If the trustee and the guardian of your children differ, this requirement
acts as a check against the guardians running off with your childrens inheritance.
Trusts not only help you transfer assets and minimize estate taxes, they also provide farmore privacy then probate court proceedings. Trust documents normally are not made
public and therefore allow you to dispense assets without public disclosure. While most of
your assets can be transferred to trusts, they cannot hold everything.
-
8/12/2019 (eBook) How to Retire Rich - Creating Your Own Personal Fortune Formula Workbook, Vol. 2 by Jordan Goodman (2003)
24/33
-
8/12/2019 (eBook) How to Retire Rich - Creating Your Own Personal Fortune Formula Workbook, Vol. 2 by Jordan Goodman (2003)
25/33
Jordan E. GoodmansHOW TO RETIRE RICH Volum e Tw o 25
have gift tax problems with an existing policy. Make sure that the new policy names you as
insured and the trust as the owner and beneficiary. Make your estate attorney carefully
prepare and review this trust to make sure it accomplishes what you want.
Charitable remainder trusts allow you to pass on your assets to your favorite charitable
institution, and then you can make an arrangement with your alma mater, a hospital that
once cared for you, your church or synagogue, or whatever institution it may be, todeposit the assets in stocks or bonds inside the trust, and you receive an immediate tax
deduction for your contribution. During your lifetime, you receive an annuity generated
by the trust assets. When you die, the assets are given to the charity. You can usually give
an unlimited amount of assets to a qualified charity with no gift or estate tax limitations.
Income tax charitable deductions limitations do apply however. It makes sense to give
assets that have appreciated sharply in value so you can benefit from a tax deduction for
the fully appreciated price but do not have to pay income taxes or estate tax on all of those
capital gains. A charitable trust coupled with an irrevocable insurance or wealth replace-
ment trust can be a fantastic vehicle for saving income, gift, and estate taxes while you
satisfy your charitable inclinations. Its very important to consult your tax advisor or
favorite charity or estate lawyer when you set up these kinds of complex trusts.
Estate tax exemptions:
You can exclude up to $1,000,000 of assets in your estate in 2003
1,500,000 of assets in your estate in 2004
2,000,000 of assets in your estate in 2006
3,500,000 of assets in your estate in 2009
To help avoid any family conflict after your death:
Leave equal shares to all your children.
Keep all your assets in your own name to avoid conflicts with first/second marriages. If necessary, create generation-skipping trusts to ensure that assets go to grandchildren
should something happen to sons/daughters.
Include in the will any outstanding loans given to family members.
-
8/12/2019 (eBook) How to Retire Rich - Creating Your Own Personal Fortune Formula Workbook, Vol. 2 by Jordan Goodman (2003)
26/33
Session 16: How to Age with Grace and Ease Enjoying Your Retirement
Once you have done your f in ancial plan ni ng and have a reli able stream of in come, you can n ow
begin the really fu n part of the planni ng process, wh ich i s decidi ng how you w ant t o spend you r
nest egg. Than ks to new and im proved m edi cal techn ology, lon gevi ty is in creasing, and many
ret i rees can an ti cipat e a li fespan well i nt o their 80s. I n th is sessi on Jordan di scusses the ki nd of
s e lf -ca re that i s necessary so th at you can experi ence both fi nan cial and experi ent i al ri chness i nyour li fe.
The various housing options that are available to you upon retirement:
Remain in the home youve been living in.
Move to a warmer climate or smaller town with less tax burden.
Move to a foreign country.
Move to an independent living facilities.
Move to a manufactured home park.
Move to a congregate housing facilities. Move to an assisted living facility.
Move to a continued care community.
Move to a nursing home.
For more information on continuing care communities, you can contact the American
Association of Homes and Services for the Aging at 202-783-2242, or go to www.aahsa.org,
for a list of all the continuing care communities across the country.
Continuing education:
Call the local college with a continuing education program and peruse their prospectus for
classes that you may wish to attend.
If you desire to, enroll in arts, crafts, or hobby classes at your local community center.
If you wish to further your education in a degree program, investigate the acceptance
requirements and procedures for enrolling in the desired program.
Hobbies:
Collecting (stamps, coins)
Crafts (quilting, sewing, woodworking)
Games (bingo, bridge)
Outdoor activities
Pets (cats, dogs)
Reading, start a book club
Sports (bowling, boating, cycling, tennis, fishing)
Theater groups
Jordan E. GoodmansHOW TO RETIRE RICH Volume Tw o 26
-
8/12/2019 (eBook) How to Retire Rich - Creating Your Own Personal Fortune Formula Workbook, Vol. 2 by Jordan Goodman (2003)
27/33
Jordan E. GoodmansHOW TO RETIRE RICH Volum e Tw o 27
For volunteer options you could look into the following organizations:
AmeriCorps at www.seniorcorps.org
Corporation of National and Community Service (CNS), www.cns.gov, 800-942-2677
National Association of Partners in Education, www.NAPEhq.org, 703-836-4880
Peace Corps at www.peacecorps.gov, 800-424-8580
Travel suggestions:
Research and perhaps join a travel group that reflects your interests, and get on the mail-
ing list to receive travel program updates.
Collect brochures from places that you have an interest in visiting and create a travel des-
tinations log from which you can choose desired destinations.
Set aside a travel kitty into which you add a small amount each week to accumulate and
use for travel purposes.
Start a travel scrapbook into which you can put photos, brochures, and paraphernalia that
you collect in your travels. If you enjoy writing, keep a travel log or journal.
The exercise aspect of maintaining a healthy, long retirement:
Practice regular cardiovascular exercise to keep the heart fit.
Practice routine weight-bearing exercise to maintain healthy bone density.
Walk regularly getting fresh air to work the lungs is integral in maintaining health.
Swimming and other exercises that are not stressing the joints are excellent.
Most importantly, partake in exercises that you enjoy and that can become habit forming.
-
8/12/2019 (eBook) How to Retire Rich - Creating Your Own Personal Fortune Formula Workbook, Vol. 2 by Jordan Goodman (2003)
28/33
Jordan E. GoodmansHOW TO RETIRE RICH Volume Tw o 28
5. Your Retirement Dreamscape Checklist is an extension of your Life Goals Inventory List. This
is a listing of every dream, desire, goal, or action that you wish to pursue. Keep this list ongo-
ing, adding new goals and checking off some endeavors as you complete them. This is a fun
way to turn dreams into action. Revisit this list often, adding items to it, and checking off
items as you complete them.
Du r i ng my r et i r em ent , I in tend to j oy fu l ly and ef fo r t lessly pur sue the fo l lowi ng in m y l i fe:
Goal or Intention Date Started Date Completed
TRAVEL
EDUCATION
SPIRITUALITY
CAREER
FRIENDSHIPS
RELATIONSHIPS
HOME
-
8/12/2019 (eBook) How to Retire Rich - Creating Your Own Personal Fortune Formula Workbook, Vol. 2 by Jordan Goodman (2003)
29/33
Jordan E. GoodmansHOW TO RETIRE RICH Volum e Tw o 29
CAR
ADVENTURE
HOBBIES
HEALTH/FITNESS
RECREATION
OTHER
Goal or Intention Date Started Date Completed
-
8/12/2019 (eBook) How to Retire Rich - Creating Your Own Personal Fortune Formula Workbook, Vol. 2 by Jordan Goodman (2003)
30/33
Notes:
Jordan E. GoodmansHOW TO RETIRE RICH Volum e Tw o 30
-
8/12/2019 (eBook) How to Retire Rich - Creating Your Own Personal Fortune Formula Workbook, Vol. 2 by Jordan Goodman (2003)
31/33
Jordan E. GoodmansHOW TO RETIRE RICH Volum e Tw o 31
Notes:
-
8/12/2019 (eBook) How to Retire Rich - Creating Your Own Personal Fortune Formula Workbook, Vol. 2 by Jordan Goodman (2003)
32/33
32
Enhance Your Audio-Learning Library WithThese Great Titles from Nightingale-Conant!
Transforming Debt into Wealth:
A Proven System for REAL Fin ancial I ndependence
By John M. Cummuta
22081A / 22081CD
Protect Your Wealth:
A Three-Part Plan for Crashproofi ng Your Career, Finan ces, and L if e
By Thomas Schweich
23180A / 23180CD
A View from the Top:
Movin g from Success to Signi ficance
By Zig Ziglar22150A / 22150CD
The Seven Secrets to Becoming a Multi-Millionaire:
How t o Mul ti ply Your Wealth Usin g Ameri cas Fin est Compan ies
By Bill Staton
20581AV / 20581CDV
Simplify Your Life:
Ways to Free You rself to E nj oy the Thin gs that Really M atter to You
By Elaine St. James
20990A / 20990CD
Solomons Treasures:
Strategies for Wealth and H appiness from the Richest M an Who E ver L ived
By Steven K. Scott
23200A / 23200CD
All available from Nightingale-Conant at 1-800-525-9000 or visit our website at
www.nightingale.com
-
8/12/2019 (eBook) How to Retire Rich - Creating Your Own Personal Fortune Formula Workbook, Vol. 2 by Jordan Goodman (2003)
33/33
N i g h t i n g a l e - C o n a n t
1 - 8 0 0 - 5 2 5 - 9 0 0 0
w w w. n i g h t i n g a l e . c o m